What is Mail and Wire Fraud?
Mail and wire fraud are federal criminal offenses involving the use of the postal service or electronic communications—such as the internet, email, or telephones—to carry out a scheme to defraud others of money or property. Under 18 U.S.C. Sections 1341 and 1343, these charges often accompany other white-collar crimes and carry severe penalties, including up to 20 years in prison per violation.
Navigating the Complexities of Federal Mail and Wire Fraud Charges
In the realm of federal law enforcement, "mail fraud" and "wire fraud" are among the most powerful tools available to prosecutors. Because almost every modern business transaction involves some form of digital or postal communication, these statutes allow the government to cast an incredibly wide net.
If you or your business are facing a federal investigation, understanding the mechanics of these charges is the first step in building a defense.
The US Postal Service has explained why (and when) these statutes were created. Mail fraud was created as a statutory crime in 1872 and wire fraud was created in 1952, long before the internet existed. These statutes were created to give federal prosecutors jurisdiction over fraudulent schemes that bypassed state lines using national communication systems. Mail fraud originally targeted postal scams, while wire fraud extended this protection to telegraph, telephone, and later by extension to the wide range of present digital communications. Sometime, when people have their own digital avatars that act to some degree autonomously, slander, wire fraud and other offenses will face the interesting legal issue - how responsible are we for our digital presence, how autonomous are these "wire" creations and when are they using wires to be subject to these and other statutes.
Understanding the Legal Definitions
While they are distinct charges, mail and wire fraud are essentially "companion" statutes. They are defined by the method used to facilitate a crime:
Mail Fraud (18 U.S.C. § 1341): Occurs when the U.S. Postal Service or any private interstate commercial carrier (like FedEx or UPS) is used to further a fraudulent scheme.
Wire Fraud (18 U.S.C. § 1343): Occurs when "wire, radio, or television communication" is used. In the modern era, this almost always refers to the internet, smartphones, social media, or electronic bank transfers.
The Department of Justice has a webpage on Mail Fraud and Wire Fraud. These provide a great deal of detail on these two crimes.
Why These Charges are So Common
Federal prosecutors frequently "stack" mail and wire fraud charges on top of other white-collar allegations, such as healthcare fraud, securities fraud, or money laundering. The reason is simple: the "jurisdictional hook." We see cases that involve billings from doctors to Medi-Cal or Medicare which we view as simple billing disputes. We have cases where our doctors bill one code and the insurance company thinks that a lower paying code was appropriate. If the insurance company or third party administrator for Medi-Cal/Medicare claims can convince the federal prosecutors that there is fraud, a simple billing dispute becomes a federal crime simply because bills were put in the mail or submitted by the internet. To bring a case into federal court, the government only needs to prove that you used an electronic device or the mail system at some point during the alleged scheme. Even an incidental email or a single mailed invoice can be enough to trigger a federal indictment with huge federal penalties.
Think about it this way. It is almost impossible to have a billing fraud, financial scam, stock scheme without somehow using the mails or the internet. Almost any fraud crime will be mail and wire fraud as well.
Here is a current example. A Grand Jury in Montgomery, Alabama, reviewed evidence and signed off on charges against the Southern Poverty Law Center (SPLC). The Indictment included 11 counts of wire fraud. The allegations are that the SPLC funded extremist groups not just to get the inside scoop through informants but to keep the groups functioning so that the SPLC could justify its existence as a fighter of these groups. Why then is is the law center charged with the same wire fraud as a medical group which submits fake bills to be reimbursed by Medicare? The answer is that the prosecutors have to prove some type of fraud. The fraud can be accepting charitable donations with the intent of misusing those donations. The fraud can be submitting medical bills for treatment that never took place. Once the fraud is proven - the means of committing (all or even a part) fraud define the crime. It seems strange but the "wire fraud" is really just a label for conduct that is in and of itself wrongful. The federal aspect of the crime is also inherent in the charge as the use of mail (mail fraud) or wires (wire fraud) will trigger federal involvement so that the fraud is not just a state crime (committed within state borders and not involving any federal entities).
So simplified to its core, wire fraud requires the voluntary participation in a fraudulent plan, specific intent to defraud, and the use of wires (phone, email, text, internet etc). Wires and mails 99.9% of the time cross state lines. There might be some case where the electronic transmission was local and federal (across state lines) jurisdiction is not triggered but with the SPLC or billing frauds the wires are almost always the internet and this "local electronic" factor does not apply.
There is an excellent webpage produced by Allstate Insurance company which describes wire fraud. If you want a "second opinion" on this topic click here - What is Wire Fraud? Examples & How to Prevent Them | Allstate.
The connection between the use of wires and the underlying crime does not have to be very major. In a 2014 9th Circuit decision a person was guilty of mail and wire fraud based upon not his, but his co-defendants use of mails or wires. Here is what the court held:
"tbecause Eddings knowingly participated in the Ponzi scheme, he “is liable for his co-schemers' use of the mails or wires.” United States v. Blitz, 151 F.3d 1002, 1006 (9th Cir.1998) (citation and internal quotation marks omitted). Brown's mailing was part of the scheme because it served “the purpose of lulling [the] victims.” United States v. Sampson, 371 U.S. 75, 78, 83 S.Ct. 173, 9 L.Ed.2d 136 (1962)"
U.S. v. Brown (9th Cir. 2014) 771 F.3d 1149, 1157
Of interest also are the courts that question whether simple/run of the mill cases are improperly being turned into RICO cases. In Metaxas v. Lee, 503 F.Supp.3d 923 (2020), the Northern District of California reached similar conclusions: the plaintiff adequately pled predicate acts of mail and wire fraud and of engaging in monetary transactions in criminally derived property, but failed to establish that the defendants' conduct amounted to or posed a threat of continued criminal activity sufficient to constitute a RICO pattern Metaxas v. Lee, 503 F.Supp.3d 923 (2020). The court cautioned against expansive interpretations of civil RICO that would transform "every run-of-the-mill fraud case that belongs in state court" into a federal RICO claim Metaxas v. Lee, 503 F.Supp.3d 923 (2020). With many high profile federal crimes every legal issue will be raised and the landscape of wire fraud, mail fraud and RICO cases is ever changing.
The High Cost of a Conviction
The penalties for federal fraud are designed to be punitive. A single count can result in:
Imprisonment: Up to 20 years in federal prison. If the fraud affects a financial institution, the sentence can jump to 30 years.
Hefty Fines: Individuals can be fined up to $250,000 per count, while corporations may face fines of $500,000 or more.
Restitution: Courts typically order the defendant to pay back the full amount of any perceived losses to the victims. An open question is whether insurance can contribute to the restitution fine. Insurance companies say "no" as they do not compensate for fraud. Our office has argued that there is a gray area where some claims may be fraud but others are a simple business disagreement. We make this argument to help our clients resolve related civil lawsuits and to offset the often huge cost of restitution in criminal cases.
Remember also that in federal cases the dollar amount of the fraud is a key factor in the sentence imposed. This is a blog in and of itself but the basic rules are this:
Within the realm of federal prosecutions, specifically for white-collar offenses such as embezzlement or fraud, the financial "loss amount" serves as the primary engine behind sentencing severity. This figure dictates the specific enhancement levels applied under USSG §2B1.1, where steeper financial damages translate directly into significantly harsher prison sentences.
To determine this value, the court evaluates two distinct metrics and applies whichever is larger:
Actual Loss: The quantifiable, predictable financial damage caused by the crime.
Intended Loss: The total sum the defendant aimed to misappropriate, regardless of whether they were successful.
Protecting Your Future
Because these statutes are so broad, they are often prone to overreach. Establishing "intent to defraud" is a high bar for the government, and there are many valid defenses—such as a good faith mistake or lack of knowledge—that can be used to challenge the prosecution's narrative.
If you have been contacted by federal agents or have received a subpoena, do not navigate the system alone. The complexity of the Federal Sentencing Guidelines requires a sophisticated legal strategy. Contact an experienced white-collar crime attorney today to safeguard your rights and your reputation.
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